washtec ag Report on the Period From January 1 to June 30, 2007 Unaudited translation for convenience purposes only

Transcription

1 washtec ag Report on the Period From January 1 to June 30, 2007 Unaudited translation for convenience purposes only

2 Stable Business Performance and Further Expansion of Direct Business in the US: Revenues at EUR 129.3m (prior year: EUR 125.9m) Strongest growth in southern and eastern Europe and the US EBIT at EUR 8.6m (prior year: EUR 7.8m) Takeover of activities of Mark VII s Texas distributor H H Change Revenues EUR m EBITDA EUR m EBIT EUR m ,8 EBIT adjusted for non-recurring effects EUR m Investments EUR m cash paid for acquisitions EUR m No. of employees as of June 30 1,516 1, Earnings per share* EUR Cash flow EUR m * diluted = basic, number of shares: 15,200,000

3 washtec ag q2 report 2007 (unaudited) Interim Management Report (Unaudited) 1. Results of Operations, Financial Position and Net Assets As forecasted, we enjoyed a stable business performance during the first six months of the year. Revenues for the WashTec Group were up EUR 3.4m (2.7%) to EUR 129.3m compared to EUR 125.9m generated during the first six months of Revenues in the core markets in Europe were down slightly year-on-year, with major customers keeping a tight rein on their spending in the first half of the year. The investment slowdown in the first quarter in Germany mainly levelled-off during the second quarter. The subsidiary Mark VII Equipment, USA, saw its revenues climb EUR 3.9m during the first six months to EUR 14.3m. Revenues of the Spanish subsidiary acquired in January, which continues to develop well, were on target and consolidated in the revenues of the WashTec Group for the period under review. Stable business performance: revenue increases mainly in the US and southern and eastern Europe. EBT stood at EUR 6.6m, compared with EUR 6.0m in the prior year. EBIT for the period rose from EUR 7.8m in 2006 to EUR 8.6m; last year s result, however, was clipped by non-recurring expenses of EUR 3.5m, mainly for phantom stocks. The decrease in EBIT adjusted for these non-recurring effects can be mainly attributed to the temporary cut-back in spending by major customers in the core markets in Europe during the first six months and also to expenses relating to activities aimed at strengthening the Group s sales and service organization in Spain and the US. The operating cash flow stood at EUR 6.4m, a slight increase on the prior year (first six months 2006: EUR 6.0m). The US subsidiary continues to perform well. As part of optimizing the sales and service channels, direct business activities in the US were stepped up further. The Tennessee region has been serviced directly since the beginning of the year, and activities of Mark VII s Texas distributor Aqua Pro were acquired at the beginning of July. USA: Takeover of activities of Texas distributor of Mark VII. In connection with the international expansion of the systems division, a cooperation agreement was concluded with the Dutch service station operator Argos Oil. In future, carwashes will be operated under the WesuRent model in the name and for the account of the customer in the Netherlands. Several international trade fairs were held in Q WashTec s innovations were presented at Autovak in Amsterdam, Motortec in Madrid and Autopromotec in Bologna. WashTec s 3D car scan system, which won the Innovation Award at automechanika in 2006, also achieved distinction at Motortec in Madrid.

4 2 (unaudited) washtec ag q2 report 2007 The international product launches of the roll-over car wash system NEW SoftWash for the basic segment and the commercial vehicle washing system MaxiWash Vario are on schedule. Collective agreement in Germany concluded: Increase in regular working hours to 37 hours in exchange for protection of employment in Germany until With regard to the projects aiming at boosting competitiveness, a supplementary collective agreement for WashTec Germany was signed by WashTec, the works council and IG Metall union representatives. This agreement provides for the gradual increase in regular weekly working hours to 37 hours and the abolishment of collectively agreed special payments until the end of In return, WashTec announced that there will be no job cuts in Germany until the end of WashTec AG s shareholders meeting was held on May 22 in Augsburg, Germany. The management board presented a detailed report on the successful fiscal year 2006 to the shareholders. All proposals for resolutions were adopted with a large majority. For example, the Company s shareholders adopted a resolution on a share buy-back program and an option plan for the management board and top management which replaces the current virtual stock option plan for members of the management board. The options for executives and management board members were issued on July 23. In addition, the supervisory board was re-elected. The previous chairman of the supervisory board Alexander von Engelhardt did not stand for another term of office. The current supervisory board members Michael Busch and Jürgen Lauer were reelected by the shareholders. The shareholders meeting appointed Roland Lacher as the third member of the supervisory board. Michael Busch was appointed as chairman of the supervisory board at the constituent meeting. 1.1 Economy and Market Economic climate remains positive, increased expenses for procurement and personell. The economic climate in Germany and Europe has not significantly changed since the last management report was published and remains positive. As the short-term investment pattern in the car wash business does not have any direct correlation with the economic conditions, only some of the positive effects from the economic trend were felt in the first six months. The effects of the positive general economic development are pushing up procurement and personnel expenses. The corporate tax reform approved at the beginning of July and the ensuing tax relief will improve the overall competitiveness of companies operating in Germany. Following an extraordinary burden in 2007 due to the wide off of deferred tax assets as a result of the fall in tax rates, WashTec expects the tax charge to decrease as of The Euro/US dollar exchange rate is currently at an all-time high. Component imports from Germany are thus driving up costs for the US business. The sales growth generated in US dollars in the US is also higher than the growth disclosed in euros.

5 washtec ag q2 report 2007 (unaudited) 3 Market conditions in the US are still favorable. Investments in car wash systems in the US market were as forecasted. The competitive conditions have not changed since publication of the last management report. There have been no major changes in technology. 1.2 Business and Earnings Situation Revenues by region in EUR m Jan. 1 to Jan. 1 to Apr. 1 to Apr. 1 to Jun. 30, 2007 Jun. 30, 2006 Jun. 30, 2007 Jun. 30, 2006 Germany Rest of Europe North America Rest of world* Total * Especially Asia and Australia Domestic revenues on prioryear-level after a good performance in Q2, revenues for rest of core Europe slightly below prior year-period. Revenues by segment in EUR m Jan. 1 to Jan. 1 to Apr. 1 to Apr. 1 to Jun. 30, 2007 Jun. 30, 2006 Jun. 30, 2007 Jun. 30, 2006 Machines Spare parts, service Used machines Chemicals Accessories Cleaning Technology segment Systems Business segment Consolidation Total Revenues for the WashTec Group were up EUR 3.4m (2.7%) to EUR 129.3m compared to the EUR 125.9m achieved in the first six months of However, it should be noted that domestic revenues during the first six months of last year were boosted by an income of EUR 1.1m from the completion of the train wash projects. Adjusted for revenues relating to the completion of the above projects, WashTec managed to make up for the sales losses in the first quarter in Germany. At EUR 14.3m, revenues of the subsidiary Mark VII Equipment, USA, were up EUR 3.9m from EUR 10.4m last year; although it must be said that revenues during the first six months of the prior year were well below target. Revenues grew mainly on the back of the positive development of roll-over brush wash systems.

6 4 (unaudited) washtec ag q2 report 2007 Spanish subsidiary continues to perform well. Revenues in the core markets in Europe (excluding Germany) were down year-onyear due to the low investment appetite of major customers coupled with the fact that revenues were above target in the prior-year period. Revenues in southern and eastern Europe continued to develop well. In comparison to the prior-year period, it should be noted that the revenues of the Spanish subsidiary acquired in January were consolidated for the first time. For the year as a whole, the Company expects to see revenues grow by more than EUR 3m on the basis of additional revenues generated from service and machines sales in Spain. Revenues from machines and spare parts in Spain were reported under export revenues in the prior-year figures. Although the systems business segment managed to push its revenues up in Q2, it could not reverse the full effects from the revenue losses suffered in Q1 due to the downward trend in the number of washes as a result of unusual weather conditions. EBIT at EUR 8.6m (prior-year period: EUR 7.8m). Earnings in EUR m Jan. 1 to Jan. 1 to Apr. 1 to Apr. 1 to Jun. 30, 2007 Jun. 30, 2006 Jun. 30, 2007 Jun. 30, 2006 EBITDA EBIT EBIT adjusted for non-recurring effects EBT EBITDA effects rose EUR 1.2m year on year from EUR 11.0m in 2006 to EUR 12.2m. The prior-year figure includes non-recurring expenses of EUR 3.5m (in particular the burden from phantom stocks and several offsetting effects). The positive one-off effects during the first six months of 2007 are mainly attributable to the final liquidation of the Canadian company (SSI) which discontinued operations at the end of fiscal year The decrease in EBIT adjusted for these non-recurring effects can be mainly attributed to the temporary cut-back in spending by major customers in the core markets in Europe during the first six months and also to expenses relating to activities aimed at strengthening the Group s sales and service organization in Spain and the US. At 58.0%, the gross profit margin during the first six months was below the prioryear level (prior year period: 59.4%). The main factors behind the development of the gross profit margin are the increase in the revenue contributed by Mark VII and the southern European companies, which generate lower margins than the WashTec Group in its core markets in Europe.

7 washtec ag q2 report 2007 (unaudited) 5 At EUR 42.7m, personnel expenses were down compared to the prior year period (first six months of 2006: EUR 45.3m). In 2006, this item included personnel expenses of EUR 4.0m for the expired phantom stock program. The adjusted year-onyear increase in personnel expenses can be attributed to the increase in headcount at the WashTec Group due to corporate acquisitions in 2006 and Headcount rose by 98 to 1,516 in the last 12 months mainly due to the acquisition in Spain and the expansion of direct sales in the US. Increased personnel expenses due to increase in headcount. At EUR 19.7m, other operating expenses were up EUR 1.5m compared to EUR 18.2m during the first six months of This rise can be attributed to the restructuring costs associated with the M&A activities in Spain, costs due to stepped-up sales activities in the US as well as the start-up and planning costs for further projects for future growth and efficiency gains. The amortization, depreciation and impairment loss expense equaled to EUR 3.7m, an increase of EUR 0.5m compared to the EUR 3.2m reported in The increase is mainly due to the write-down on investments in connection with the implementation of projects on production restructuring in Germany and the US. EBIT rose to EUR 8.6m, compared to EUR 7.8m in Adjusted for non-recurring effects, EBIT was EUR 3.0m down year-on-year. Finance costs were up slightly from EUR 1.8m to EUR 2.0m, mainly due to inreased EURIBOR rates. EBT increased to EUR 6.6m for the period, compared with EUR 6.0m during the first six months of After deducting taxes, net profit equated to EUR 4.0m (prior year: EUR 3.6m). Earnings per share (diluted = basic) stood at EUR 0.26 (prior-year period: EUR 0.24). Balance Sheet Assets in EUR m Jun. 30, 2007 Dec. 31, 2006 Non-current assets Current assets Non current assets held for sale Balance sheet total Intangible assets recognized under non-current assets as of June 30, 2007 increased from EUR 61.2m as of December 31, 2006 to EUR 62.5m mainly as a result of the first-time consolidation of WashTec Spain. Inventories increased from EUR 34.0m to EUR 39.1m during the first six months of 2007 due to the expansion of direct sales in southern Europe and the US as well as a temporary increase in finished goods. Trade receivables decreased from EUR 41.8m as of December 31, 2006 to EUR 38.6m due to seasonal factors.

8 6 (unaudited) washtec ag q2 report 2007 Other assets increased from EUR 2.8m to EUR 3.7m due to the recognition of hedging instruments for interest and exchange rates. Equity and Liabilities in EUR m Jun. 30, 2007 Dec. 31, 2006 Equity Liabilities to banks Other liabilities and provisions Deferred income Balance sheet total The acquisition in Spain was financed through the WashTec Group s credit facilities. Liabilities to banks rose to EUR 60.0m from EUR 57.3m as of December 31, The increase in trade payables from EUR 11.4m as of December 31, 2006 to EUR 17.9m was essentially driven by the purchasing volume and the related increase in inventories as of the balance sheet date. Provisions decreased from EUR 31.3m as of December 31, 2006 to EUR 29.5m due to their utilization. Equity ratio at 30.9%. Due to the positive result for the period, consolidated equity increased from EUR 61.7m to EUR 65.7m. Cash Flow Statement Cash flows from operating activities equated to EUR 6.4m during the first six months of 2007, a moderate increase on the prior-year period of EUR 6.0m. Cash flows from investing activities equated to EUR 4.0m, compared with EUR18.8m achieved in the first six months of The focus of investments in the current year was on the acquisition of the exclusive partner in Spain and the replacement investments in Europe. The acquisition of Mark VII Equipment in the US was the investment focus of last year. Cash and cash equivalents decreased overall marginally EUR 1.4m as of June 30, 2007 compared with the balance of EUR 1.6m as of January 1, Employees Headcount rose by 98 to 1,516 in comparison to June 30, 2006 due to the acquisition in Spain and the expansion of direct sales in the US. In comparison with December 31, 2006, this is an increase of 65 employees. WashTec s employee statistics for the period under review include 33 employees of Motor Mediterraneo, now WashTec Spain, for the first time.

9 washtec ag q2 report 2007 (unaudited) 7 The WashTec Stock The WashTec stock price rose from a year-end price of EUR to a closing price of EUR as of June 29, Management was in continuous contact with journalists and the financial community during the first six months. A number of conference calls and meetings were held with analysts and investors in connection with the Company s publications. The WashTec stock is currently being covered by Berenberg, Cazenove, HVB, HSBC Trinkaus & Burkard, Merill Lynch and MM Warburg. After the close of the second quarter, the Company received the following voting rights announcements: on July 17, 2007, Threadneedle Asset Management reported that its share in voting rights had decreased to 5.3%; Powe Capital Management reported that its share in voting rights has increased to 16.1%. The current shareholder structure thus breaks down as follows: Shareholding in % July 17, 2007 Cycladic Capital Management LLP Powe Capital Ltd IED International Equity Development GmbH 8.9 Julius Baer Investment Funds Services 5.9 Threadneedle Asset Management 5.3 Free float 42.8 Changes in share in voting rights: Powe Capital Management increases to 16.1%. * Source: notifications pursuant to the German Securities Trading Act [ Wertpapierhandelsgesetz : WpHG] Events After the End of the Reporting Period Mark VII Equipment acquired the activities of its Texas distributor at the beginning of July This acquisition is hoped to drive and further expand the direct business in the US stock options in-line with the stock option plan agreed on during the shareholders meeting on May 22, 2007 were issued on July 23, 2007 to the subscription holders. The corporate tax reform adopted in May 2007 is due to take effect as of January 1, The consequences of this reform for WashTec are discussed in the notes to the financial statements.

10 8 (unaudited) washtec ag q2 report Forecast Strategy scheduled to be presented at WashTec s first investor day in September. The management board still aims at achieving an EBIT margin of between 10% and 12% with moderate organic growth for the entire fiscal year. The margin at the end of the fiscal year will essentially depend on the total amount invested in future growth which, together with the described expansion of the sales and service activities in southern Europe and the US and other projects in the planning phase, is and will remain an important element of WashTec s strategy so long as an overall EBIT margin of at least 10% is expected. Following an extraordinary burden in the current fiscal year, the net profit of the WashTec Group is likely to improve by more than 10% due to the implementation of the corporate tax reform in Germany. The medium-term forecast plan will be reviewed and approved during the third quarter. Key elements include projects on growth and efficiency with concrete measures for achievement. The aim is to take up a leading position as a full-service provider for car wash systems in all major global markets in the medium-term. Further acquisitions may also be made in this context. The expansion of the service range, especially in the core European markets with high market shares, is a major part of the strategy as are the efficiency projects for maintaining WashTec s competitive edge. The strategy is scheduled to be presented to the Company s institutional investors during the course at an investor day to be held in Augsburg in September. This will be WashTec s first investor day and is aimed at further intensifying the relationship with the financial markets. 3. Opportunities and Risks Relating to Future Development There were no major changes compared to the opportunities and risks presented in the annual report 2006.

11 washtec ag q2 report 2007 (unaudited) 9 Consolidated Income Statement (Unaudited) Jan. 1 to Jan. 1 to Apr. 1 to Apr. 1 to June 30, 2007 June 30, 2006 June 30, 2007 June 30, 2006 EUR k EUR k EUR k EUR k Revenues 129, ,868 68,989 66,372 Change in inventories of work in progress 1,619 3,256 1,396 6,014 Own work capitalized Other operating income 1,907 2,527 1, Total 133, ,877 71,717 73,439 Cost of materials 58,020 57,125 31,742 34,048 Personnel expenses 42,708 45,250 21,848 21,009 Other operating expenses 19,736 18,181 10,165 9,952 Amortization, depreciation and impairment of intangible assets and property, plant and equipment 3,689 3,230 1,864 1,590 Other taxes Totel operating expenses 124, ,082 65,809 66,749 EBIT 8,555 7,795 5,908 6,690 Financial result 1,980 1,835 1, Result from ordinary activities (EBT) 6,575 5,960 4,898 5,790 Income taxes 2,577 2,384 1,918 2,316 Consolidated profit for the period 3,998 3,576 2,978 3,474 Earnings per share (basic = diluted) EUR 0.26 EUR 0.24 EUR 0.20 EUR 0.23 Rounded-off to EUR k, rounding differences are possible. The notes to the consolidated statements form an integral part of the consolidated financial statements for the first six months of fiscal year See notes for explanations to the consolidated cash flow statement.

12 10 (unaudited) washtec ag q2 report 2007 Consolidated Balance Sheet (Unaudited) Assets June 30, 2007 Dec 31, 2006 EUR k EUR k Non-current assets Intangible assets 62,474 61,215 Property, plant and equipment 35,815 38,471 Financial assets ,314 99,858 Deferred tax assets 23,373 24,840 Non-current receivables and other assets Total non-current assets 121, ,730 Current receivables and other assets Inventories 39,073 34,020 Trade receivables 38,553 41,842 Other assets 3,697 2,762 81,323 78,624 Cash and cash equivalents 4,966 3,045 Prepaid expenses 1,580 1,327 Total current assets 87,869 82,996 Non-current asstes held for sale 3,126 1,110 Total assets 212, ,836 Equity and liabilities June 30, 2007 Dec 31, 2006 EUR k EUR k Equity Subscribed capital 40,000 40,000 Capital reserves 44,338 44,338 Other reserves Loss carryforward 22,734 35,236 Net profit for the period 3,997 12,502 65,704 61,728 Non-current liabilities Liabilities to banks and similar institutions 48,852 48,226 Other 5,469 5,049 Non-current provisions 13,374 13,474 Total non-current liabilities 67,694 66,749 Current liabilities Liabilities to banks and similar institutions 11,119 9,024 Trade payables 17,864 11,389 Advances received on account of orders 3,464 5,951 Provisions 16,125 17,797 Other 25,546 29,269 Deferred income 5,199 6,929 Total current liabilities 79,317 80,359 Total equity and liabilities 212, ,836 Rounded-off to EUR k, rounding differences are possible. The notes to the consolidated statements form an integral part of the consolidated financial statements for the first six months of fiscal year See notes for explanations to the consolidated cash flow statement.

13 washtec ag q2 report 2007 (unaudited) 11 Consolidated Cash Flow Statement (Unaudited) Jan to June Jan to June EUR k EUR k Result from ordinary activities (EBT) 6,575 5,960 Reconciliation of Profit and Cash Flows From Operating Activities Amortization, depreciation and impairment of non-current assets 3,689 3,230 Gain/loss from the disposal of non-current assets Interest and similar earnings Interest and similar income 2,412 2,118 Change in non-current provisions Increase/decrease in trade receivables 5,307 2,690 Decrease/increase in inventories 4,483 3,620 Increase/decrease in trade payables 6,501 2,031 Change in other net working capital 11,809 5,994 Income taxes paid Net cash from operating activities (net cash flow) 6,447 5,992 Cash paid for investments in non-current assets 2,242 5,027 Cash received from the disposal of non-current assets 1,021 2,426 Cash paid for the acquisition of a subsidiary, net of cash acquired 2,781 16,165 Net cash used in investing activities 4,001 18,766 Repayment of subordinated loans 0 1,836 Raising of long-term loans 292 9,390 Interest paid 1,980 1,834 Repayment of non-current liabilities from finance leases Net cash/net cash used from financing activities 2,506 4,874 Net increase/decrease in cash and cash equivalents 60 7,900 Correction of foreign exchange differences 83 0 Cash and cash equivalents as of January 1 1,570 6,856 Cash and cash equivalents as of June 30 1,427 1,044 Rounded-off to EUR k, rounding differences are possible. The notes to the consolidated statements form an integral part of the consolidated financial statements for the first six months of fiscal year See notes for explanations to the consolidated cash flow statement.

14 12 (unaudited) washtec ag q2 report 2007 Statement of Recognized Income and Expenses (Unaudited) June 30, 2007 June 30, 2006 Changes in the fair value of financial instruments used for hedging purposes recognized under equity Adjustment item for the currency translation of foreign subsidiaries and currency changes Exchange differences on net investments in subsidiaries Actuarial gains/losses from defined benefit obligations and similar obligations 0 0 Deferred taxes on changes in value taken directly to equity Valuation gains/losses recognized directly in equity Result after taxes 3,998 3,576 Total income and expense and valuation gains/losses recognized directly in equity 3,976 3,388 Rounded-off to EUR k, rounding differences are possible. The notes to the consolidated statements form an integral part of the consolidated financial statements for the first six months of fiscal year See notes for explanations to the consolidated cash flow statement. Statement of Changes in Equity (Unaudited) T? Subscribed Capital Accumul. Other Exchange Total capital reserve loss reserves effects As of December 31, ,000 44,338 35, ,281 Income and expenses recognized directly in equity Taxes on transactions recognized directly in equity Consolidated profit for the period 12,502 12,502 As of December 31, ,000 44,338 22, ,728 Earnings recognized directly in equity Taxes on transactions recognized directly in equity Consolidated profit for the period 3,998 3,998 As of June 30, ,000 44,338 18, ,704 Rounded-off to EUR k, rounding differences are possible. The notes to the consolidated statements form an integral part of the consolidated financial statements for the first six months of fiscal year See notes for explanations to the consolidated cash flow statement.

15 washtec ag q2 report 2007 (unaudited) 13 Notes to the Condensed Interim Consolidated Financial Statements of WashTec AG (IFRSs) for the Period from January 1 to June 30, 2007 (Unaudited) General 1. Information on the Company The condensed interim consolidated financial statements for the period from January 1 to June 30, 2007 are to be authorized for issue by the management board after the supervisory board meeting on July 31, The ultimate parent company of the WashTec Group is WashTec AG, which is entered in the commercial register in Augsburg, Germany, under HRB No. 81. The Company s registered office is Argonstrasse 7 in Augsburg, Germany. The Company s shares are publicly traded. Unless otherwise indicated, the consolidated financial statements are presented in euros. Amounts are rounded to the nearest euro and shown in thousands of euros (EUR k). The purpose of WashTec AG, as the ultimate parent company, is the acquisition, holding and sale of shares in other entities, and the assumption of the function of the holding company for the WashTec Group. The purpose of the WashTec Group also comprises the development, manufacture, sale and service of car wash products, as well as leasing and all related services and financing solutions required to operate car wash systems. 2. Accounting Policies Basis of Preparation The condensed interim consolidated financial statements for the period from January 1 to June 30, 2007 were prepared in accordance with IAS 34,»Interim Financial Reporting«. The condensed interim consolidated financial statements do not contain all the disclosures and explanations required in annual financial statements and should be read in conjunction with the consolidated financial statements as of December 31, 2006.

16 14 (unaudited) washtec ag q2 report 2007 Significant Accounting Policies The accounting policies applied in preparing the condensed interim consolidated financial statements are in line with the methods used in preparing the consolidated financial statements for the fiscal year as of December 31, 2006 except for the following amendments to standards and interpretations. The application of these amendments did not have an effect on the Group s results of operations or financial position. IFRIC 9 only requires an entity to assess whether an embedded derivative is required to be separated from the host contract and accounted for separately as a derivative when the entity first becomes a party to the contract. Subsequent assessment at a later date is prohibited unless there are changes in the terms of the contract that significantly modify the cash flows resulting from the original contract, in which case reassessment is required. On first-time application, the assessment as to whether an embedded derivative must be separated must be made based on the circumstances existing when the entity first became a party to the contract unless there were subsequent changes in the terms of the contract which significantly modified the cash flows. IFRIC 10 stipulates that an entity may not reverse an impairment loss recognized in a prior interim period on goodwill and investments in equity instruments and in financial assets carried at cost and that an entity may not extend this consensus by analogy to other areas of potential conflict between IAS 34 and other standards. 3. Cash and Cash Equivalents For the purposes of the condensed consolidated cash flow statement, cash and cash equivalents break down as follows: in EUR k June 30, 2007 June 30, 2006 Bank balances and cash on hand 4,966 3,559 Bank overdrafts 3,539 4,603 Cash and cash equivalents 1,427 1,044

17 washtec ag q2 report 2007 (unaudited) Income Taxes For the purposes of the condensed consolidated cash flow statement, cash and cash equivalents break down as follows: in EUR k June 30, 2007 June 30, 2006 Deferred tax expense 1,703 1,591 Actual tax expense Income taxes 2,577 2, Business Combination Under an agreement dated December 12, 2006, the Company resolved to acquire all the shares in the Spanish entity Motor Mediterraneo S.A. The agreement was concluded subject to a condition precedent. WashTec obtained control over the entity at the beginning of 2007 on fulfillment of the contractual conditions. Motor Mediterraneo S. A., with its registered office in Barcelona, Spain, and a branch office in Madrid, had been the exclusive trading partner of the WashTec Group in Spain since The entity operates, installs and maintains car wash systems and has some 30 employees. In recent years, Motor Mediterraneo has generated revenues of some EUR 7m and has had a sustained positive net result. A purchase price of up to EUR 6.3m was agreed. This includes a cash acquisition of EUR 2.9m and comprises an amount retained vis-à-vis the seller. Incidental acquisition costs of EUR 160k were incurred for due diligence services and other transaction costs in connection with the acquisition. Due diligence reviews were performed for all major areas, such as legal, financial, IT and market risks. Pursuant to IFRS 3, the amounts of assets and liabilities allocated to the purchase price can be broken down into their fair values and carrying amounts as follows: Motor Mediterraneo in EUR k Fair value Carrying amount Cash and cash equivalents 2,880 2,880 Trade receivables 2,306 2,306 Other receivables Inventories Property, plant and equipment Intangible assets Goodwill (acquired) Trade payables 1,596 1,596 Other liabilities 2,381 2,476 3,583 3,145

18 16 (unaudited) washtec ag q2 report 2007 Goodwill of EUR 2.6m comprises the fair value of expected synergies. The consolidated profit includes half-yearly earnings of EUR 51k and revenues of EUR 3,933k. 6. Segment Reporting The Group defines the following business segments: The Cleaning Technology segment comprises the development, design, production, sale and servicing of automatic wash systems for cars and commercial vehicles. The Systems Business segment offers system solutions for the operation of vehicle wash systems. The machines produced are sold to a leasing company and then leased back in order to lease them on to customers, especially large operator groups or oil companies, within the scope of their operator model. As a rule, these agreements have a term between five and ten years. The Systems Business is consolidated in WesuRent Car Wash Marketing GmbH, Augsburg, Germany. All other entities have been assigned to the Cleaning Technology segment. Business Segments The following table presents the earnings and profit of the Group s business segments for the period from January 1 to June 30, 2007, and 2006, respectively. In EUR k Cleaning Technology Systems Business Consolidation Group Revenues 127, ,475 1,764 1, , , ,868 Other earnings 2,136 2, ,137 2,753 EBIT 8,433 8, ,555 7,795 Income from interest and financial assets Interest and similar expenses 2,292 2, ,412 2,118 Profit from ordinary activities 6,573 6, ,575 5,960 Income taxes 2,577 2,385 Consolidated profit for the period 3,998 3,576 In the prior year, revenues from consolidation chiefly related to proceeds from sales of machines to other segments.

19 washtec ag q2 report 2007 (unaudited) Property, Plant and Equipment In the first half of 2007, non-current assets of EUR 2,242k (prior year: EUR 5,027k) were acquired, not including acquisitions from business combinations. In addition, specific measures were introduced to sell the site of a former production facility. Please see the further explanations on non-current assets held for sale for more information. 8. Non-Current Assets Held for Sale As part of the production restructuring plan and related consolidation of production facilities, the Company plans to sell its land and buildings which are no longer in use. In 2007, concrete sales negotiations for the land and buildings at Gubener Strasse in Augsburg were entered into. The sales price is expected to amount to EUR 2m. As of June 30, 2007, the carrying amount of the property was EUR 2m and was allocated to the Cleaning Technology segment. 9. Interest-Bearing Loans In January 2007, additional loans of EUR 5,800k were raised from the existing credit line of the syndicated loan to finance the acquisition in Spain. These loans were granted at the same terms existing as of December 31, A repayment of EUR 2,500k was made in March Contingent Liabilities and Other Financial Obligations Contingent liabilities and other financial obligations are largely unchanged against December 31, Related Party Disclosures In 2007, a bonus for 2006 and a consideration for the execution of a contractually agreed noncompete provision totaling EUR 441k was paid to a former member of the management board. In 2006, WashTec Cleaning Technology GmbH acquired technology for the production of hydraulic car wash tunnels from a private person, who was subsequently a temporary general manager of a foreign subsidiary of the WashTec Group. The purchase price included contractually agreed earn-out targets. In 2007, an agreement was concluded with the general manager on his employment contract and the earn-out targets. The terms of the transaction are arm s length.

20 18 (unaudited) washtec ag q2 report Financial Instruments As of June 30, 2007, WashTec holds the same financial instruments as of the end of The carrying amounts and fair values break down as follows: in EUR k Carrying amount Fair value Carrying amount Fair value Jun. 30, 2007 Jun. 30, 2007 Dec. 31, 2006 Dec. 31, 2006 Financial assets Cash 4,966 4,966 3,045 3,045 Derivative financial instruments 1,692 1,692 1,414 1,414 Financial liabilities Bank overdrafts 3,539 3,539 1,476 1,476 Obligations under finance leases 6,054 6,054 6,948 6,948 Variable-rate loans 56,431 56,431 55,774 55, Subsequent Events In its meeting on July 6, the German upper house of parliament (Bundesrat) passed the corporate tax reform. The corporate tax reform provides for a reduction in the corporate income tax rate from 25% to 15% and a decrease in the trade tax base rate. Trade tax is no longer a deductible business expense. For the WashTec Group, these changes will negatively impact the subsequent measurement of deferred tax assets and, from 2008, will have a positive effect on actual taxes payable due to a decrease in the tax rate from 39.2% to less than 31%. Based on estimated net tax profit/loss, the subsequent measurement of deferred tax assets will result in an expected expense of between EUR 3m and EUR 4m in 2007, which must be recognized in profit or loss. Based on the same conditions, net profit/loss will rise by more than 10% from 2008 due to the corporate tax reform. 767,000 stock options at a nominal value of EUR 2.63 each were issued after the balance sheet date in line with the plan resolved by the shareholder meeting on May 22, The stock option plan supersedes the payment commitments made to management board members from the virtual stock option plan which were described in detail in the notes to the financial statements from December 31, Of the stock options, 600,000 relate to management board members and 167,000 to executive employees who report directly to the management board. For the purposes of the terms of these options, the issue date is July 23, The exercise price is EUR

21 washtec ag q2 report 2007 (unaudited) 19 The stock options may be exercised after a waiting period of two years. The waiting period starts from the issue date of the stock options. The stock options have a term of five years from the issue date (the»term«). If they cannot be or are not exercised by the end of the term, they expire without replacement or compensation. The stock options may only be exercised after the end of the waiting period, if the performance target has been achieved: The performance target has been achieved if the unweighted average of the closing rates of the Company s stock in XETRA trading on the Frankfurt Stock Exchange exceeds the exercise price by 20% over a period of ten consecutive trading days during the waiting period. The option terms may stipulate that the Company is entitled, instead of issuing new shares, to disburse the fair value of the shares less the exercise price (in this case, payment of the exercise price is not required) or to provide shares from its own portfolio of treasury shares or those acquired for this purpose, in return for payment of the exercise price. As part of optimizing sales and service channels, direct business activities in the US were stepped up by assuming all the assets and liabilities totaling USD 1,400k of a trading partner in Texas under a purchase agreement dated July 6, 2007.

22 20 (unaudited) washtec ag q2 report 2007 Review Report To WashTec AG»We reviewed the condensed interim consolidated financial statements prepared by WashTec AG, Augsburg, Germany, comprising a condensed balance sheet, condensed income statement, condensed cash flow statement, condensed statement of changes in equity and selected explanatory notes, together with the group management report for the period from January 1, 2007 to June 30, 2006, which make up the half-year financial report pursuant to Sec. 37w WpHG [»Wertpapierhandelsgesetz«: German Securities Trading Act]. The preparation of the condensed interim consolidated financial statements in accordance with IFRSs for interim reporting as adopted by the EU and of the interim group management report in accordance with provisions prescribed by the German Securities Trading Act for interim group managements is the responsibility of the Company s management. Our responsibility is to issue a report on the condensed interim consolidated financial statements and on the interim group management report based on our review. We conducted our review of the condensed interim consolidated financial statements and the interim group management report in accordance with German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the review to obtain, following critical appraisal, a level of assurance that the condensed interim consolidated financial statements have been prepared, in all material respects, in accordance with the IFRSs for interim reporting as adopted by the EU and that the interim group management report has been prepared, in all material respects, in accordance with the provisions prescribed by the German Securities Trading Act for interim group management reports. A review is limited primarily to making inquiries of the Company s employees and analytical assessments, and therefore does not provide the assurance obtainable in an audit. In accordance with our engagement, we have not performed an audit and, accordingly, we cannot express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the condensed interim consolidated financial statements have not been prepared, in all material respects, in accordance with the IFRSs for interim reporting as adopted by the EU or that the interim group management report has not been prepared, in all material respects, in accordance with the provisions prescribed by the German Securities Trading Act for interim group management reports.«munich, Germany, July 31, 2007 Ernst & Young AG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft Broschulat Wirtschaftsprüfer [German Public Auditor] Schönhofer Wirtschaftsprüfer [German Public Auditor]

23 Management Compliance Statement To the best of our knowledge, and in accordance with the applicable reporting principles for the interim consolidated financial statements give a true and fair view of the net assets, liabilities, financial position and profit or loss of the group, and the interim management report of the group includes a fair view of the development and performance of the business and the position of the group, together with a description of the principal opportunities and risks associated with the expected development of the group for the remaining months of the financial year. Thorsten Krüger Spokesman of the management board Christian Bernert Member of the management board

24 Financial Calendar 9 Month Period November 2007 Analysts Conference/ Equity Forum November 12 to 14, 2007 Annual Report for 2007 March 31, 2008 Contact WashTec AG Karoline Kalb Argonstrasse Augsburg, Germany Tel.: / Fax: / washtec@washtec.de